♪ rishaad: the international monetary fund is warning about trade wars and rising protectionism. caps off and even other global economy. at -- motion hinting this is a good unit had importantly no idea. i'm rishaad salamat in hong kong. this is bloomberg markets. looking around, attend a look at

the china futures. this is in shanghai and shenzhen. let's look at what is in store for us. this is to the downside. we are looking for a bit of weakness in the shanghai. perhaps some of the confusion in the markets is just read that herbal session on wall street. volumes were very heavy as well. we are looking into that. because equity futures of the osi to the upside. that is adding a little bit of support for what is going on in this part of the world. we are looking for ways to be out and trade discussions. investors are looking out for any signs of those. in fact, it is extending that advance we saw last week. china and hong kong maybe a half hour away.

but they're coming online. >> asian stocks are looking mixed. u.s. futures are pointing higher but it could be because of the uptick in treasury of the we are definite or risk appetite when it comes to stocks. in tokyo we have the dollar-yen toward that one that we handle. we want to highlight was going on in singapore, stocks losing intensive -- a 10th of a percent. creating tof overweight from neutral on a positive earnings outlook, particularly from financial firms. a little bit of focus on the earnings agenda. japanese stocks are plush wedding the yen falls for a fourth session. they are respected to be solid ahead of the boj policy committee. although the yen could find support given the political scandal surrounding abe and the finance ministry. --port for our base cabin

continues to say. i want to check in on toshiba shares that were rising over 5%. we could miss a deadline to sell this chip to a f group. a spokeswoman on sunday said she intends to follow through with the transaction with an alternative deal. however, that is how toshiba said such a high price for the unit. it is estimated to be worth $24 billion. over in seoul, we have engineering stocks soaring. we also have head of financial rising after his first quarter results. airlines,ook at green we do have a sharp horse after his twore daughters were fired after outburst. local media reported the alleged water vision incident. to theh will get closer

tapering down of quantitative easing from the european and let's find out more as we get to the westward news with paul allen. thank you, the policymakers are said to be waiting until their july meeting to announce how they will wind up with the banks to north korea. we are told that they want sufficient time to judge if the euro economy is overcoming his first quarter slowdown. sources also said no formal discussions have occurred. toy are a briefly dropped his level -- lowest level in two weeks on the news. president trump is tempering the optimism about north korea has they are skeptical about his promises to hold -- halt the nuclear testing program. he held the day progress and said he is far too many kim jong-un at some point. however he told his twitter followers of things are long way from echo version and that things will or won't work out.

iran says it will be start's nuclear program if u.s. breaks the deal struck with the powers. president trump campaigned on strong opposition to the 2015 agreement and has threatened to drop what he calls serious flaws are fixed. they said that would live america isolated diplomatically and trigger unpleasant consequences. advice, this is not a bilateral agreement. it would be seen by the international community that the united states is not a reliable partner. iran has many options and those options are not pleasant. >> the hong kong stock exchange was told it is taking steps to resolve the westech banned but the threads of survival. they have a from buying american components for seven years as punishment for exporting

equipment to iran and north korea. the company says the ban could hurt its global business and that it is working with relevant authorities to find a solution. global news 24 hours a day on on twitter, talk powered by more than 2700 journalists and analysts. i am paul allen, this is bloomberg. rishaad: stephen mnuchin says he is considering a trip to china in an effort to diffuse the trade spat between the two biggest economies in the world. at the imf was that an escalation could derail global growth. is across all of this. jodi: we don't know that it occurred. but i do think that it shows that the u.s. is particularly concerned about the optics of this. at least looking like they want

to try to diffuse the trade tensions. imf said thathe one of the risks to global growth were these trade tensions and global trade tensions as well as the increasing global pile of debt. that is another concern. i think at the treasury secretary obviously with the backing of demonstration wants to try to at least pursue some avenues of discussion. he did meet with the head of the central bank of china this weekend. that was about central bank issues but also he did say it was about china opening its march to the u.s. which the u.s. appreciated. so i think there is some attempt to try to diffuse this. is anotherat will issue.

i think it was deeper than that. the fact that this has rattled markets which made it could have been predicted -- the fact that that has happened and that there is broken stones and there are concerns on a global center. it has been ratcheting up. that may take action based on this 1977 law that would basically really restrict china's investment in the u.s.. continueds been ratcheting up. this is something we saw in the trump administration, a lot of talk, a lot of pressure and then backing off sometimes. rishaad: there's been a lot of talk about emmanuel macron. trip to meetthis

with donald trump. is that they looked at closely? jodi: he does have a good rapport with president trump. ony did work together estrogen syria and that was beautiful and successful. yet, some of the things he wants to talk about including the iran nuclear agreement are contentious. president trump has said he wants to. congresss coming up, -- the president has to report to congress on whether he thinks that they're are under made in the terms of the agreement. france and other countries have said that they are standing by the iran agreement. if the u.s. wants away from it, that could really diapered it. of course, the other thing the president macron wants to talk about his trade. and a lot of these trade issues and the restrictions. so the opening up of the global trade as opposed to closing some

of the doors. , primuse how that goes supposedlyapan, they have a good knowledge of he walked away relatively empty-handed. we will see if president emmanuel macron there's better. -- fares better rishaad:. rishaad:given what iran has been , this ringleader of north korea's going to be looking at this and signing off on a do it , as you may try that the iranian foreign minister is right? jodi: that is right. it all comes with that possible meeting. betweensible meeting north korea's leader and president trump, president trump this weekend had a few more things to say about that. saying there may be conditions on the meeting.

some thought it was less likely that it would occur. that is a very good point. whether these are women are stood by, there must be something on many leaders mines. >> jodi schneider, the international editor. we will be discussing risk and our next guest. later, the good doctor will be checking the pulse of the hong kong market. we will get you the details on that and more, this is bloomberg. ♪

♪ rishaad: this is bloomberg markets in hong kong. a quick check on the pulse of the asian trading. the first trading day of the week. it is a bit of a mixed bag but

there's a lot of weakness in turkey, australia is in the opposite direction. let's have a look at what is happening there. the of support for the likes of copper and other commodities. all of these are that weaker. is for contents of a percent gain on the s&p asx. let's have a look at what we can expect through the course of the trading week. think you very much indeed for joining us. it is a busy week. i think 40% of companies are going to be reporting. thus far we have seen very good numbers. this is not that think illegal for the market. i think some of has been expected. suresh: yes, so far i think we saw a major earnings coming from

u.s. banks. the dynamics hunting the kind of action in the market. i think this we will be very important because 40% of the companies will be reporting. so far, if you look at the results, the earnings have been on the highest that we have seen in the last few years. i think as the earnings for tech companies come in this week, market could surprising on the upside. that will be a major supporting factor for the market this week, i think. rishaad: yes in many of these companies come out and see amazing growth. but the point i think is that investors are not looking at these earnings because they are looking into the mirror. they're looking six months ahead. that is the problem. yes, but if you look at

the earnings expectations for the u.s. equity market, this is somewhere around 70 or 80%. i think that is pretty good. even for next year we're looking at double-digit earnings. i think the market is focusing too much on the noise but not focusing on fundamentals. i would expect the markets to start focusing on earnings and also potentially buying back the announcement coming from companies because this with the first quarter for copies to guide on buybacks after the tax reform last year. rishaad: that brings in another angle. they are not spending their money, that is not really good for the economy by and large. suresh: yes, i think it will be a mix. especially, buybacks. it will be better for companies to invest entirely into buybacks.

it is going for a mix of and the buyback and dividend. so far, if you look at the business confidence and intentions from the is copies, it has been strong. that the flex definition coming from u.s. backed firms. one of the biggest risks out there, one is naturally trade. the other is upside risks growing on the inflationary front. walk us through both those. sure, on the inflation side, these practices have been going up. the inflation expectations have been rising. the u.s. has 2.2%. the is leading to a jump in bonds in u.s. market. i think over the next few months, as inflation goes higher we are likely to see bonds

rising. we are looking at the 10 year bonds in the range of 3.2%. having said that, i would say the demand for the bond market is still very high, especially for a lot of these. given the mess for the pension funds, that is why we are not laughing to see a substantial jump. as the bond remained within range of 314% or 3.2% i don't think there is much risk to the market at this point of time. >> are the prospects of that finally feeding through? andy looking at the spreads hoping to propel the dollar high. there seems to be a little change in sentiment toward it. we have seen that the dollar has been in range. in the range of 80 92 99.5 level. but i think there is any potential for them to rebound.

because they've been concerned about the deficit in the us. given that the deficit -- the us would be burning a divisive -- turning a deficit next year. bonds coming into the market, i don't think there would be a bump in the us dollar. our view is that most like the dollar government soft against major currencies like the japanese yen, euros and asian currencies as well. rishaad: what about what people may be missing here? is there anything that people are really not pricing in? >> i think it is the earnings picture. so far we haven't seen any positive reaction to the earnings side. i think investors are focusing too much on the noise that we are seeing and also on the risk. but the investors need to focus back on fundamentals and fundamentals for equity markets are pretty good.

rishaad: that is just it. trade tensions -- at what point do we get trade tension fatigue? this is the issue here. i think that the longer they linger, there is a risk to the global economy and markets. it might start to impact the business confidence. so far we haven't seen any kind of reaction and our expectations are that the us and china will eventually have enabled this dispute, isn't the benefit of both of the countries to have a settlement. both of the countries would get impacted by this. what are the indications for investing? how are you trading -- changing your strategy? think equity market positions up and down a lot. the fundamental pictures look pretty good. within the equity markets, asia

and china are the top one. re-think chinese equity markets can give substantial differences. also, very attractive valuation. despite the concerns about the u.s. china trade war, we think china could do well. raise youthe equities are looking at is emerging markets but give us an idea, do we stay with things like the defensive side of things? the values out of the equation or is so growth? but people have made the shift from growth to value even though the waters between the two are quite muddied. suresh: we are not so negative on growth. for example, in china, i think last year, tax clearly underperformed. given that the chinese banks offer exposure to the chinese economy, i think they will continue to do well.

recently, the earnings results have been pretty good and given that we would be coming to the season in june, some fund managers might look to stretch the bank from other sectors. >> thanks so much, have a great week. an investment strategist. you can use e.g. tv . catch up on can analysis. you can also save them for future reference, this is bloomberg. ♪

♪ we are back, having a look at the latest business flash headlines. says itocks investment is standing as noble group shareholders are threatened by a move to know mccord members. it is required by law to reject the nominations which were not

legally valid. it would see credit as taking all about half of his $3.4 billion in debt written off in a change for equity, one of deutsche bank biggest shareholders is cutting its stake after two months saying that it wouldn't. -- after saying it wouldn't. china's trying to raise a $16 billion to do it problems that it has back home. stake from 8.827.9. it is still committed to being a major investor in deutsche bank. there were reports from germany that they were dissenting voices that should have seen management at that bank. -- theyrvisory board named him as his replacement. we'll say that there were multiple no votes in each.

down to the oven in hong kong and mainland china. but have a look at the futures prospects. there are 3/10 of 1% down. contract, that futures is down about 12. about a quarter of 1%. let's have a look at what might be moving on these markets. bloomberge it to the i met function here. this adjusts just we'll be seeing a broad-based markdown, the only sector it would seem which is actually moving to the upside. it quickly that the problem that we could be in store for chinese banks as well. we heard of this reduction in the reserve ratio. investors piled into some extent. it could be a false dawn. although financing has indicated

by the green bars, it is as you going to the downside, the overall amount of debt is absolutely massive. we will be checking on that next. ♪

♪ icc, this is 929. we are counting down to the start of the trading day. we have 40% of the s&p reporting earnings. we have the likes of microsoft, amazon, twitter. you can go to alphabet or google if you want. haveank of china, we also samsung, halliburton as well. geopolitics taking center stage. steve mnuchin is considering

this. this is after last week's advantage. treasury yields continue to rise, thought to about 2.96 at the moment. this is where data, ecb and the u.s.. without further ado, here she is. >> we are seeing shares extend despite hint of a u.s. china trade truce which could provide some encouragement on some stocks that are focused thinking by the daily limit and shenzhen. that is going up about a third of a percent. now over in hong kong, we're seeing the hans saying there's ground with tech stocks leading that drag including technology, lenovo. they saw 11% increase in revenue. phase, the pboc

weakens the devotees, emerging assets are under pressure given that uptick in u.s. treasury yields. let's check in on pyongyang after goldman sachs resumes coverage on the stock with a new price target, this after first quarter results showed broad-based growth across all resell products. attracted good dr. seven investors including blackrock, gic to its hong kong ipo. that could raise $1.1 billion, investor orders will be taken on monday through april 26. , tencent music entertainment is preparing an ipo attention for the second half. they last check on chinese, the telco stocks posted first-quarter stocks. it met estimates and unicom delivered a feet. the share chinese -- share price is jumping.

rishaad: thank you so much. let's move along. this could be a bit of a diffusion in tensions between beijing and washington. here is paul allen with the first word. paul: china says it welcomes a potential visit by stephen mnuchin who says he is cautiously optimistic the two sides can reach an agreement on trade. the measure of commerce as it is been told mnuchin is planning to travel to beijing although no dates have been determined. the u.s. and china have all -- that aen warned full-blown trade dispute could derail the global economy. as chinese hackers have targeted defense companies. as suspect is a group known apd 10. chinese espionage has been tracking since 2009.

they say that they frequently target research and develop an organization to collect information -- on politics. people have been killed by a suicide bomber. victims were the women and children. more than 100 other people were wounded. the islamic state group claimed that it carried out the attack saying that it targeted shiite. the bombing comes one month after militants killed 31 people and resolving persian new year. bloomberg has been told that theresa may is fighting to overt is concerned she she may break the promise to take the u.k. out of the european union trading block. government officials say the prime minister's in a circle says that she may be forced to stay in the you customs union because parliament will reject her plan to abandon.

global news 24 hours a day 27 hundred journalists in more than 100 20 countries, i am paul allen, this is bloomberg. china has a specific timetable for opening up its financial sector, aiming to have measures in place by the end of the year. let's look at all of this. what you making of this? >> we have been talking about financial reform. this is every emphasis of what was at last year. essentially, if you look at the , it is coming from the announcement. >> we keep on hearing this. we also have this series of pledges. quite often, people are getting

pledge fatigue are they? >> i would say so. even if you look at the financial reform, you see that the key sectors are under protection. 25%,should have kept the publicly over the next couple of years it would be released. for the other financial sector, it is less connected and people can on up to more than 50%. the problem is that historically, investors can on up to 49%. it creates a decision dilemma. 49% in the 51%. sunopta gets to say what to do. we have seen some of the financial cup is with such ownership that is actually having efficient in action. >> it will happen at some stages?

>> all that -- overtime. >> let's have a look at these things as well. we see the reservations being reduced slightly. we have a story today suggesting that what it is is preparing the ground for another assault on shadow banking. what is your take? guest: i think it would create my in the chinese system. rishaad: explained that. guest: the central bank and all , this is sort of to change the ways and money. market,'re doing open your monetary policy can be radically politically neutral from the state council. we all know that interest rate decisions have to get the approval from the state council.

when you can dance, presently have to know how much money goes into the system and secondly, there is an interest charge on the funding for the commercial banks you get there. that way u.s. get the interest rate. and that is how cleverly i would say the social things are getting away from political instances. you become truly neutral. rishaad: somebody is already in charge of that central bank. he is in the year of the president. guest: that is true, he is a reformer. china reformed its currency fishing for information strategy. even though at that point in time, also in early 2016, the chinese market thinkers the potential loss in the change for

now, there's a push through with reform. now, i think for a long time now, the chinese central bank has stopped intervening in the market. so he is a reformer, i think people and industry tend to have ideas.sitive think the road for quite reform has a long way to go. >> no intervention taking place with the foreign exchange. as you can see, moving to the upside of the moment. we see this appreciation continue. but is that wanted? that it is ay for 2016.eversal when you to the currency go from six to seven to the u.s. dollar.

it was a substantial correction in the currency rate. 2017, the chinese for excellent position has been showing the research at one stage, below and now it is coming back up. also, the way the economy is going, it is throwing down but is actually throwing down less than what people fear. so that is what people start picking up summary of confidence in the currency. >> i want to talk to you more about this. aboutl be talking more the currency going up and the applications of that and looking behind the scenes and having a look at how china has -- how this could mean a people new phase for the banks touching on that, more on that, this is bloomberg. ♪

♪

welcome back. leslie was out of the chinese economy. let's quickly moved to the idea of reducing risk in the chinese financial system. we touched on that. how dangerous is it? thanks seem to be unloved because of the reserve ratio but -- rally speaking, >> the levers in go up. so we touted that is a tremendous achievement. even though in 2017, the levers came down slightly, the private leverage by the town's residents -- the ghana. the chinese people, for some reason continues to love the boring leverage and get into the proper sector. example,weekend for there only 300 units of the trip

-- luxury property. tenant or 20 million each. it went up with an f a day. it shows how much enthusiasm the chinese investors have in the chinese property. they goteven though deliver seven of it. is at the expense of china's private leverage. rishaad: maybe that is something that supportive of the chinese economy. >> yes and no. if you look at the consumer confidence. is the highest it is ever been. property priceng performance gives them confidence in chinese consumption. that is why chinese investment growth is slowing down. is a chart of what is happening.

40, 40, we're seeing low levels. on top of that we have bond yields. inhink i've seen 4% plus november. we're talking about 3.5%. that is loaded looked to the upside. but the yield keep falling. that could be a product of people getting out of equities and going to the bond market. let's put it another way. what about stockpiles, they are at record highs. then on top of that we have 6.8% growth. figuresly, one of those -- if you add cnh ncn why, they're going up and up. >> i was a that it is a sign that the economy is slowing down. at least the economy is not consuming as much as it used to be. toevery year, according china, even in the first quarter you see a dramatic pick up an iron ore because people start up

in anticipation of the peak building. going into the summer. now the problem is that for 2018, and interface of potentially more. could buy dell's advocate and say maybe it is because it is going toward the consumption economy and that is what is driving growth. i could also resort and argue against myself because electricity usage, seasonally adjusted is down. >> if you look at the manufacturing sectors, they have been leading the recovery since 2017, it is coming down in the first quarter as well. would say once again the economy is slowing down. nobody knows for sure. -- that the officials statistics become automatic. rishaad: we have always known that there was a problem there. >> the problem could be bigger than before. some of the official statistics

are no longer release for people to do research on them. davis would get rid of the chinese volatility. they start listened actual cumulative numbers figure by category. i would say note is getting harder to know the truth in chinese growth. rishaad: nothing new there. let's have a look at what the consequences of all this are. what kind of patient is a painter no? trust the bond market. it has a lot in there. the fact that you mentioned just the chinese buzzer going from 4.1%.

it is a huge move. also, comparing to what is happening in the u.s. market when you see the tenure bonds normally inpick up, this environment where inflation pressure is no longer set, people are willing to put money into the bond market. that is number one. bank, nowe commercial that the barcode, they have 400 million in excess liquidity. the loan growth is slow. the economy is slowing down, therefore, the banks have knowledge lend the money to set up with the money into the bond market. rishaad: moving on from this, it has trade hedges that are affecting markets globally. but in china, we do have a different way of looking at things. in some of said it your research, you're looking at a china's economy. that is a plant economy.

but it is self-reliant. championing globalization. >> that is true. time, rather of than what we've already achieved, if you look at the , there areor sector some the key components that are relying on export. one by the us government, you can see on the verge of collapsing. news conference as well, they admitted the mistake and also the dangers that it is facing. so even though we are working moment,he goal, at the we are far from this. that isis one thing and something else. does underline how much resolve the u.s. administration must been trying to slay the

trade dragon as someone would put it? likey prisoner looks strategic confrontation between the two great powers. i think china is at a stage where it can probably be said that the trade systems for that. >> maybe a lot of people say legitimatecerns are but is the wrong way to do it. >> that is right. the next thing you have to worry about is the u.s. companies operating in china. billion, posted 50 doing billion u.s. dollars coming out of china, as part of it is selling more cost in china than in the u.s.. you have to worry about that as well. thank you, he was their trips -- chief strategist.

you can look on the bloomberg terminal, it is the interactive tv function. you conducted to some of the security we talk about in any of the interviews we are doing. you can also become part of the conversation by sending us messages during our programming. only for bloomberg subscribers, have a look at it. this is bloomberg. ♪

♪ what about dr.'s resident for hong kong is that could raise more than one billion u.s. dollars. the online health platform is china's biggest short. let's bring in crystal. tells about the terms. >> this at a price range of hong kong dollars, 50 points to 54.8 and then they have attracted seven investors, taking a total of 550 million u.s. dollars.

that is half of it. we are seeing a few interesting names and all the seven names are interesting. gic, theirng investors from thailand. in general, it is a pretty good mix of cornerstone investors. they are taking orders starting today through thursday, april 26. that is relatively short. need themobably don't was time. given what demand is like normally. she tells what the demented she is like right now? >> this morning are hearing that the retail subsection has gotten over 115 times. rishaad: david it should give themselves 10 minutes. himtal: the usual cousins -- mechanism is that anything over five times would be automatically allocated to retail investors.

in this case, and the first morning, it has always surpassed 95 times. so we are not worried about retail demand at all. we should be worried about institutions either. cornerstoneh a 50% and 25% retail, you always have 25% so for days is asher quite doable. -- actually quite doable. rishaad: let's look at tencent. what are we hearing about that? we have spotted by involved. crystal: we heard that tencent music was planning an ipo. so we still don't know where and when this is exactly going to happen. there decided between the u.s. and hong kong. what we know is they want to raise about one billion u.s. dollars. you are right about the spotify idea. spotify has a stake.

revealing thee is valuation of tencent music would billion andut $17 we are expecting the ipo to definitely not be like that. definitely we can expect that to be about 70 billion. rishaad: what about the way that spiderlike into the market? crystal: this will have internal work to do before they can proceed. so we will see what structure to decide on. rishaad: thank you so much. she is the asian field reporter. toshiba is denying reports that it is considering dropping the sale of its flash memory chip division. saleewspaper said the could be canceled if toshiba does not receive approval from china's antitrust authorities by the end of may.

toshiba says there are no plans to abandon the deal and the transaction will go ahead as soon as possible. the chairman of korean airlines has apologized for the behavior of his youngest daughter and says that she and her sister are leading the cup -- leaving the company. they insulted an advertising executive during a meeting at through water in his face. her sister heather was just recently after ordering a plane back to the gate when she thought she was served some nuts in the romantic. mcquarrie capital is upping a bid for energy producers. this is a mccord is working with quadrant energy on a potential bid for the lng project. comes with quadrant itself said to be up for sale. they are believed to be fielding offers.

coming up, we'll have a look at a shift to tech. these are the ratcheting trade tensions. that is next. ♪

♪ rishaad: pacific markets drifting in muted trading. here is the protection and jump on politics. welcomesays it would the chance at kim jong-un has performed -- confront his holding's nuclear test program. president has died back on the optimism. this is bloomberg markets.

takata has a mixed bag out there. a lot to digest at the moment. there was a bad section on wall street. equity futures now showing a bit of a lift up their in new york and they're adding a bit of support and that is stopping us from not going back to far. as look at how your money is behaving itself. thisally wasn't direction monday. -- we are looking for direction this monday. shares in hong kong have been fluctuating for most of the session. this as chinese tech stocks are joining this regional downturn. tencent, the biggest drag on the regional benchmark along with tsmc in taiwan. that is a stunning fight as the quad-play post this worst drop since 2013. in japanese electronic makers continue to fall amid global concerns around smartphone demand but japanese banks and insurers, they're gaining ground as treasury yield is rising.

asian bonds are tracking treasuries lower and granting and aussie benchmark off by about five basis point so far today. let's check in on the current hong kong dollar trading at the highest level in about a month. the yen is trading near a two-month low, as it toward that 108 handle. tokyo research institute said investors were likely feeling relieved with the yen looking .table boosting hopes that solid profits are achievable. now this week, hundreds of topics over these results. in the korean won that is slipping along with the cost. traders are largely shrugging off that north korea signals that it will alter their test. findorean won will support. in the commodities space, a mixed picture after metals caps a turbulent week. alumina bowling for a second session. oil is slipping as the u.s.

count climbs to a three-year high. checking in on toshiba shares on the board, the stock rose over 5% amidst figuration that it will miss a deadline to sell its chip business to a n brew. noble shares are expected to step a four-day lock. over and so we have korean engineering stocks getting nearly 30% rising along with peers. rishaad: also looking at. peers-- trade. we are looking at a bit of a saw between washington and beijing. let's get more in the first word news, here's paul allen. , china says it was a potential does it right stephen mnuchin who says that he is cautiously

optimistic that the two sides can reach an agreement on trade. mr. of commerce as it is being told that minutia -- steve mnuchin is planning to travel to beijing. a full-blown trade dispute could derail the global economy. dte is taking steps to resolve the westech been by the company says it runs at survival. zte is being blocked from buying u.s. parts for seven years. they said the ban could had its -- hurt its global business. iran says it will be start's nuclear program if the u.s. breaks the deal struck with the six powers. president trump campaigned on strong opposition to the 2015 agreement and has threatened to drop it amidst what he calls serious flaws. the iranian foreign minister said that would lead america

isolated and trigger unpleasant consequences. advice that has this is not a bilateral agreement between iran and the united states. withdrawing from it would be seen by the international indication that you do not states is not a reliable partner. iran has many options and those options are not pleasant. >> at least 57 people have been killed by a suicide bomber in kabul. a votereted registration system. habitat the victims were women and children. more than 100 other people were wounded. the islamic state group says it carried out the attack. the bombing comes just one month after militants killed 31 people who are celebrating persian new year. global news 20 were hours a day on air and at tech on twitter powered by more than twice and hundred journalists and analysts

in more than 120 countries. i am paul allen, this is bloomberg. trump ispresident tempering the optimism on north korea despite kim jong-un announcing he will halt nuclear test missiles. the presence as we are a long way from a conclusion. steve engle is with me now, a long way from a conclusion. but it is a big step taken this week, was it? it reconfirms the status quo. there have been no new very tests or missile tests since september. he basically was saying on friday that he will halt nuclear and icbm tests. he is not escalating, we can put it that way. he has agreed to dismantle the up in the northeast which many thousands officials say was probably already disabled after that final h-bomb test in september which there a tallorts of

collapsing. maybe that was only put out of commission. the status quo has been confirmed ahead of this big summit on friday between moon jae-in and kim jong-un, keep in mind, kim has made no mention of denuclearization. he has not said that he is going to abandon or get rid of his known 60 warheads, nuclear warheads or the unknown number of icbm missiles. this is not denuclearization. this is a pledge to maintain the status quo. >> a test ban. >> we will see what happens when the two summits happen. rishaad: what has been the reaction from the other capitals around the world who are stakeholders? steve: you can imagine the japanese a bit more pessimistic about that. shinzo abe has maintained a more hardline the parts. he wants donald trump to

maintain the pressure there. so we saw donald trump back off a look at it from pratt's tweets where he said it was very good news, big progress, but for to a summit, he backed away from some of those comments saying it is a long way from conclusion. i think we have that sweet we can bring a. maybe these things will work out, maybe they want. only time will tell. but the work i'm doing that should have been done at long time ago. the other big players is china. the global times newspaper calling on south korea and the all to immediately left unilateral sanctions. i doubt that will happen until we get more concrete pledges on dean of the recession. mind, the north koreans, when they talk, if they do talk about denuclearization. that means of u.s. has to denuclearize on the korean peninsula. rishaad: there is also different

noise about donald trump. maybe he's just coming on a winning formula but maybe there talking to soon. fore: he is taking credit getting kim jong-un to come to the bargaining table. there can be many other avenues or reasons why but the sanctions are obviously starting to bite. there are reports that the breadth are a lot of the foreign exchange reserves, china hasn't necessarily back to the united nations and the sanctions. there is economic pressure on him. he has recently that capability, a nuclear state. now, we can go to the next. still to come this hour, we will be discussing the risk to the global economy. has a change of heart on deutsche bank. we will be finding out why.

this is bloomberg. ♪

♪ rishaad: we need to get it from where we are two countries that have gained from globalization and know the future is going to globalization but are not big enough to matter. they need to be thinking about opening up their own economies and at the same time, the united states needs to be letting go of unilateral precious to achieve its goals. a trade war is bad, everybody will -- nobody wins, it is lose-lose. we are the temple of multilateral reason. we must say protectionism is not

the solution. it is a problem. is not toht solution engage in any kind of war against china. the right solution is to engage china, to have china on board, trying to improve institutions related to trade. we have been speaking with the imf world bank meetings in washington this weekend. rising protectionism dominated the spring meetings. the samell saying thing, protectionism is bad, free trade is good, let's get out of this whole situation. i'm sure that is the obvious point and that is what they would say. >> absolutely. but i think there is a couple of things that investors should consider. the first one is until now the debate has been very focused on the china u.s. trade tensions. really there at the very heart of this.

but it is of course much broader. u.s. has a given concerns about trade with software which have been addressed with a renegotiation. more forthat was a bit cosby your it -- cars from the u.s.. chris this was part of the deal but i think a much more important part of the deal was the still quarter. what we are seeing here is a return of quotas. quotas are also against wto rules but i think there are two takeaways for the other trade tensions coming out. that is particularly relevant to the negotiations with the eu which we are bound to seriously step up this week. the temporary exemptions from steel and aluminum tariffs run out on the first of may. so this is not very far away at

all. it is probably not a coincidence that both the u.s. and merkel is watching at the end the week. they have discussion between trump and merkel that are found to be pretty intense. the euas criticized position for quite a long time. -- time. does have a point that the u.s. tax has imported cars and this is a 2.5%. that is kind of bound to come up. we'll see what they do with the -- rishaad: europeans don't buy american cars anyway. >> at least u.s. administration can argue -- why don't you reduce your character the seminal we have on your cars and maybe there will be somewhat cars. the situation is different between them for the civil reason that the two automobile

sectors in the two regions are for jim and producing a whole cars in europe and vice versa. your journal published to produce a whole lot there. we have seen the trumpcare is about steel. -- we have seen that trumpcare's about steel. -- we have seen that trumpcare's about steel. >> let's get to a series this can be, sure, the lesson in the and they say that trump's consent a legitimate, is been addressing the wrong way. perhaps by sapping tariffs, there are other clever ways to underline the seriousness of it. that visibleue medical the seriousness of administration. yes, i don't want to comment.

this goes to why i say that the charlie rose trade tensions are so much more complex. it is about the international property right. because itmblematic goes to the heart of the needs of america's needs, china's plan, made in china 2025 by was china was to become the leader in a number of technologies and of course, this is challenging for dominance of the u.s. and the u.s. is trying to block it as much as it can. but that i don't think is a legitimate concern, but of countries have these kinds of industrial plans and they are not usually subject to international agreement. to make this work, the u.s. position is that china has

promised this before and they haven't followed through on it. so what is important is that china and the u.s. find ways in which they can -- in which they trust and confidence building measures. i think that is the direction. i think in the end, my best onss is that those tariffs 50 doing bital imports between the china and the u.s. are not going to be implemented. the steel and aluminum probably will, as well the tariffs introduced in january with washing machines. those are probably going to stay. the big risk gets out of control. you really get into the growth. rishaad: that is the problem. it is about investment the grow.

and competence. these things can create almost a vicious circle and the opposite would create a virtuous one. steve: that is right. i think at this stage, even the 50 billion, in the greater scheme of things, pretty small. this is less than 0.3% of gdp. the risk is through confidence. will you really invest in a plan if you're not sure about your supply chains, if you're not sure about the market access. this is definitely detrimental. >> is all about ip theft? is in the way they have dealt with this company that we talked about -- could do it other coming similarly? around notou get

having but using it and getting it those sort of ways? >> let's hope not. in this around not having case, it was triggered by -- i don't know the background but it is about the sanctions and having circumvented sanctions on iran. that has been the reason for the punishment, we deftly have to be careful that we don't get into a technology war. beingh the idea of there trade tariffs coming in, many people have compared this to japan in the 80's but this time is it not different? asia or east asia in particular? these, theall of areas where the u.s. is most concerned because it is the biggest section of the trade deficit that the u.s. has with in computers and electronics.

the domestic content is less than 50% and you're right, countries like korea and japan and taiwan are most important in the foreign value that is in those chinese exports but there is about 10% u.s.. it is also a significant part of europe. this is one of the things that is trouble tariffs, it is pretty difficult to her china without hurting other economies. many of which are close allies of the united states. withver, the problem tariffs is also that nowadays, only about 10% of chinese exports come from state owned enterprises. a lot of those come from wholly-owned foreign companies that use china has a production base. then you have the joint venture. it gets complicated but tariffs are pretty lousy way of going about it.

>> they're going up the belgian, isn't that kind of a -- plugging a dead horse? this would have really hurt them. it is more service orientated, more consumption orientated and it is moving more massively focused in that regard. is i think with u.s. concerned about where we will be in five or 10 or 15 years time. because chinat has progressed so much, there are concerns about intellectual property becoming more important because china is not competing primarily on low wages. it has immigrated to countries like vietnam. rishaad: how would you characterize growth in china? 6.8% is one thing but i've been asking this question. we have bond yields from over 4% in november to 3.5 on the

tenure. we have a currency that keeps on appreciating, at the same time, we have archers the usage on the way down. then we have record amounts of iron ore inventories, some of those numbers have to be wrong somewhere. the stability of gdp growth has been nothing more than stone -- stunning. that is pretty unusual. that china's growth is in a deceleration phase, even though we had a significant surprise last year. i think the slowing overall credit growth is an indicator that that is going to happen. but there is one interesting aspect about the upside surprise about gdp growth in china over the course of 2017. the slight acceleration came from a significant improvement in their trade contribution.

even they were actually right that the chinese economy is not as independent as it is to be, the fact is that deceleration usrall gdp growth came from entirely from this. rishaad: can look at the markets? let's look as we head towards the japanese lunch break. this is bloomberg. ♪

♪ let's have a look at the latest business flash headlines. the chairman of korean airlines has apologized and says that he and -- she and her sister ali been the company. a advertising executive and through water in his face. jailedter heather was briefly after ordering a plane back to the gate in jfk after

she thought she had been served some nuts in the wrong manner. deal, if ise to a stable a bankruptcy filing was in the carmaker is issuing a statement soon. this choice for the concessions from the government and korean development beggars returned 70% of the business. about $2.8 billion through to the end of 2017. it is standing as a noble group shareholder and it is threatened by its attempts to nominee for members. they can reject the nominations that are not legally valid. the restructuring plan could see credit is taking over with about half of its $3.4 billion of debt written up an exchange for equity. this is what was like at the moment over in tokyo, the nikkei

is heading for a loss of portents of 1% as we head into that hour-long lunch break. last fall back which is essentially flat. ♪ retail.

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>> tim: 29 in hong kong, i'm paul allen with the first word headlines. president trump is tapering optimism about north korea as lawmakers remain skeptical about promises to halt their nuclear testing program. the president had hailed what he called big progress and said he looks forward to meeting kim jong-un. now he has told twitter followers that things are long way from a conclusion, and things will or won't work out. cybersecurity firm fireeye chinese hackers of targeted japanese defense companies. the suspect is a group known as apt10, a china-based espionage

that it has been tracking since 2009. ecb policymakers are said to be waiting until their july meeting to announce how they will wind up with a big stimulus program. they told members of the governing council to judge if the euro area economy is overcoming its slowdown. sources also say no formal discussions have been held on rate strategy. the euro dropped to its lowest level in two weeks on the news. bloomberg has been told theresa may is planning to incite a rebellion inside the conservative party. the prime minister's inner circle inc.'s she may be forced to stay in the eu customs union or she will be forced to

reject the point. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. ♪ fx, crossing the headlines, a story that we are covering between the leaders in the north -- leaders in north and south korea may be talking by hotline today. today.ll talk later let's look at the market action. we have a narrow picture. >> we're seeing a downturn in asian stocks. even though u.s. features are pushing higher, the uptick is sparking anxiety over concerns about company earnings and rising inflation. investors are trending more toward the geopolitical side. the indignation of you -- the

indonesian rupiah up, 10 year yields rising for a sixth straight session. let's check in on the hong kong dollar. i will show you with chart on the terminal. it has jumped to a one-month high, the largest ipo in the pipeline, expected to push up higher rates. whoas attracted investors will be taking orders for april 26. this could be one of the biggest ipo so far this year in hong kong, potentially raising one $1 billion. and checking in on chinese tech stocks, investors are worried about exposure to the united states, even lenovo. the stock is at its for its andgest loss in 14 months, is forced into action against speculators. >> thank you.

toshiba. we have been looking at this story, it is believed to be considering new students for its with the may 1 deadline to sell its unit led by bing capital. up by more than 5% in the session, 4.5% closing out. the biggest intraday jump we have seen since november. eid, tell us about it. >> the main news today is that they are all but guaranteed to miss the deadline. this would be the second deadline. there's another one that has just been set, reportedly by the chinese authorities on may 28. that's the next day to watch. amidst all of this, what we are hearing from sources is that toshiba has started a way, a possibility of other option for

the chip unit, including possibly an ipo. resultthis will probably in higher sale price for the unit, and that is why the shares have been going up. >> do you think -- they haven't decided if they will make the sale, but as the chinese put that data in for coming to the conclusion, why is china involved in the first place? >> that's a good question. essentially there's a few things going on. it was initially because of the groupement of sk hynix, a put together by bain capital to buy the chip unit, and because they have operations in china, china gets to weigh in on the deal. but there's a whole other dynamic going on. china is also trying to build its own semiconductor sector,

and we have rising trade disputes between china and the u.s. to a certain extent, it may have been caught up in that. the other thing to note is that toshiba no longer needs the money. it raised financing in other ways. so the pressure of the company to essentially raise the cash has somewhat alleviated, and that has opened the door to more options for the sale of the unit, if at all. >> reed, thank you so much. let's go to one of deutsche bank's biggest shareholders, cutting at stake two months after it said it wouldn't. money aftero raise financing problems at home. david, how much of the surprises this? >> well, it was a surprise.

in february they said they would remain committed to deutsche bank, they wouldn't be selling their stake. if you saw this in your email over the weekend yesterday afternoon you would be a bit surprised. but as you clicked of the story and read into it, you would see this is a relatively small transaction. they said they won't be selling the stake down any further, and that it was related to a derivative set up, so there was an expiration date and the transaction was related to that rather than their attempt to pare their stake or raise cash through it. >> where are they, then, with their cash raising goal? $12 billion is how much they have raised so far. >> yes. they found a buyer. there are two ways you can measure it, you can talk about what they put on the block.

they are getting close to $20 billion, the initial goal had been $16 billion. if you look at what they are willing to sell, it's about $20 billion. they found buyers. they are not quite to that 16 billion yet, they still have a ways to go. june is coming around, so you can bet there's still a lot of pressure to find buyers for those assets, even though they have shown they are willing to sell even their trophies. >> they really do have a problem because they are not able to meet their interests. that is hugely difficult for them. what else is left on the block for them to sell? >> a cohort deals they had expected to raise some cash and a couple ipo's. and called both of them off

now we are looking at various assets. they have investments in various aviation related service industries in these sorts of they have already named their assets and sold most of them on the block. they have a couple financial tower real estate deals going in new york, those are yet to be concluded, they have yet to find buyers. we can expect a big announcement in the coming days. are in antioned, they precarious financial position because their borrowing costs are so high, that they can't just roll over their debt anymore without increasing their total indebtedness. they are really working fast. later this week, we will get some insight into the financial position. it will be a bit backwards but they will be reporting earnings later this week, as investors will be looking at their debt ratios closely. >> great talking to you.

dave mccombs. we have to take a break, but on the other side of it, it's flying in the face of airlines profit forecast. potential damage to the carriers. this is bloomberg. ♪

♪ >> back with bloomberg markets, i'm rishaad salamat. wti and brent up after the $68, nearly at $69 per barrel. let's bring up jet fuel. this is just a normal graph of what has been happening. this is a year ago, jet fuel prices went up. we have gone up 40% in a year, and that is going to be bit of a headache for airlines because

jet fuel is often their biggest expense. squeezedriers could be because it is difficult for them to pass on higher prices to their customers in their entirety. we are getting one crucial perspective -- how much pain can we see? and who's likely to be the worst off because of this? aipac carrierse to increase by 9 billion u.s. dollars this year because of the higher prices. in asia, the airlines have very low fuel levels, only about 15%. in fact, only a quarter of the carriers are well hedged. the key losers will be jet ivan because they have limited fuel hedging or profit

margins are extremely thin. >> absolutely. they have their fuel strategy wrong, according to reports. once bitten, twice shy. >> indeed. the expensive fuel will finally roll over next year, and the current fuel hedge ratio on the low 20%, much lower than the andorical average levels, below that it is more consistent off the coast of 50%, all the way to 2022. airlines woulde be better off, relatively speaking. what about the others who may well be not as worse off as the carriers? >> apart from singapore airlines, whose fuel is already

in the money, we also have qantas, air new zealand, virgin australia, which are very well hedged. so are the japanese carriers. they also have consistent fuel hygiene policy. they are at 30% to 40%. based on our estimates, a 1% increase in jet fuel price will cut these carriers net profit by less than 1%, as opposed to close to 3.3% intake for the asian airlines sector on average. >> if we look at the low cost side of things versus these do they finders, it easier to pass on the fuel costs to the passenger in the form of surcharges, where they are flexible and adept at doing it? typically, the low-cost

carriers operate longer, and that helps a lot. the newer generation aircraft, more fuel-efficient than the older planes. some of them operate in markets where their home currencies have appreciated against the u.s. dollar, the malaysian ringgit, that certainly helps them because they are generally paid in u.s. dollars. and yes, they do manage to pass on fuel costs to their customers, but at the same time, it's usually less than 100%, but they definitely aren't a better position compared to carriers that operate long-haul, leisure markets. the fuel surcharges tend not to be over passed on the higher fuel costs compared to the dorter haul routes stop >>

they just suck it up for the time being? can they absorb them? at what point do we start to see the fuel surcharges that we had a few years ago? >> we are still quite far from that point. will reallylines feel the pain when oil prices hits about $90 per barrel. but at this point, because travel demand is still pretty strong and the markets are going quite well, especially integration markets and domestic markets, the impact will not be as significant for carriers that face less overcapacity. but for long-haul markets like the transpacific route and also to european cities, this could actually hurt the carriers a bit more. globally, the airline margins are very thin. profit margins are only about

5%. every bit counts and we will be watching the fuel price and hedging policies of these airlines going forward. let's get away from the fuel side of things, although you can added into the mix. who do you think at the moment is outperforming in asia, and are they at the moment able to deal with that threat from the middle eastern carriers in particular? been a challenge, especially for carriers like singapore airlines, and even qantas and cathay pacific. the good news is that some of the middle eastern carriers have started to scale back their expansion plans, we have seen emirates also being more moderate. however there is still qatar airways which is looking to double its fleet and it is

really putting pressure on the long-haul yield particularly. they alsoat in mind, had serious problems with this embargo by the gulf states. they are not in a good position, financially speaking. we don't have full transparency. hub andut china as a how that opens up? >> china is doing extremely well, the domestic sectors in the 80 range, domestic yields are trending up. for international routes they are still trying to open new markets and there's a lot more competitive pressure and that is hurting cathay pacific as a result. but generally we think that the chinese airlines have a profit advantage over the larger hub carriers thanks to their much

younger aircraft averaging five or six years old, and they are benefiting from a very strong demand. it is still low in china and the desire to grow the international travel market remains very strong. we think we are in a good position and if you look at the aircraft ordering schedule and the delivery plans, capacity growth is finally moderating for the chinese carriers. they will be growing capacity by 9% to 10% the next three years and that will be very manageable and more supportive for yields. >> thank you very much for your time. she is the ceo of crucial perspective. charts,teract with the have a look at the recent ones we have been featuring. catch up on some of the key analysis.

this is bloomberg. ♪

♪ >> the trump administration's protectionist moves against beijing have both chinese investors on alert, and they are responding to changes. and one capitalism investment firm leading with the country's electric vehicle maker.

what tight rules against chinese investment could meet. there are always quite a few uncertainties, but nowadays there's is the one sector for and that could change but wevestment behavior we are maybe not sinking -- [indiscernible] does it make you look at other jurisdictions with a greater focus? >> if we think it happens or pete italy, -- happens repeatedly, people will move to other regions. to close the door is not wise.

i won't believe it will be locked too long, but we are very serious. >> you are focused on a lot of areas and technologies that fit into the made in china 2025 strategy. i wonder how concerned you are about the hostility that chinese companies are facing from the u.s. in terms of the access to u.s. technology in the impact that is going to have on the sectors. market, if an open --can get every technology you need [indiscernible] although it is hard, this is a good time to remind everybody that a healthy economy has deep

roots. term -- but in longer than, it's not a good thing. >> so ultimately this move by the u.s. to restrict access could prove a catalyst for chinese companies. >> yes. it will also help china come to a decision, and we start to invest in fundamental technology. the and i/o capital partner speaking to tom mackenzie. markets:on "bloomberg david is up for a look at the big story of the day so far. take it away. >> it's a quiet start to the week.

you look at the equity markets, they are fairly range bound. we are watching the three-year, the 3% on the 10 year. securities. point do we find yields? what level do yields start to be dollar positive? we have seen the move back into the dollar. >> the dollar is up against everything except hong kong dollar. >> even then, we see a bit of movement of the dollar? inching lower? >> sterling is also up. lots of things. this time last week, everyone was expecting the boe to move in a week and a half. now you look at the probability of that meeting, it is below 50%.

that was from those comments of mark carney. everyone presumed it was a done deal. >> it's not just next meeting. --t that has really taken the other thing we will talk about, in this has to do with the rising yield environment, india. we all know expensive oil and india don't mix. you put that together with scandals in bad debt, and you understand why a lot of economies have started to cut their growth back in india. that is something we will talk about in the next hour. ♪

♪ >> almost 11:00 in hong kong and singapore, i'm david ingles. welcome to "bloomberg markets: asia." ♪ >> markets in the asia-pacific, muted trading. the yen's lies as protectionism in geopolitics dominates. have a look at oil. the rally stalls as president trump accuses opec of keeping prices artificially high. mnuchin plans a trip

to china. beijing says it would welcome the chance to meet him. out, butat is playing not so much of the equity market. ' value wespeaking, saw in south korea, nothing happening. we are slightly lower, most regional -- most equities on the way down. s&p futures started out fairly bright and then rationalized making our way into midday. we have been waiting for the 3%, nothing happening in that market. a little higher if you want to be generous. toare flattered compared friday, but if you take a step back, that is the thinnest spread. 33.5 basis points, going all the way back to 2007.

the dollar is catching across everything except against sterling and the hong kong dollar which is where we are watching the spread looking at three months. 117 basis points a couple weeks back, back to 100 basis points right now. the slightly stronger hong kong which is strong enough to alleviate the pressure we have we will be asking in just a moment where he thinks this should go and might go when it comes to the hong kong dollar, at what point do we have to worry about the disruption? that's happening across markets this monday. let's get over to paul allen for an update of your first word news. >> thanks, david. president trump is tempering optimism about north korea.

lawmakers sounded skeptical about promises to halt the nuclear testing program. the president had healed what he called big progress. the city looks forward to meeting them at some point but now he has told twitter followers that things are a long way from a conclusion. restart says it will its nuclear program if the u.s. breaks the deal. president trump campaigned on strong opposition to the 2015 agreement and has threatened to what he calls he serious flaws are fixed. the iranian foreign minister as it would trigger "unpleasant consequences." to everyone has told the administration that this is not a bilateral agreement, and withdrawing from it would be seen by the international community as an indication that the united states is not a

reliable partner. iran has many options, and they are not pleasant. ecb policymakers are sent to be waiting until their july meeting to announce how they will wind up without banks to illustrate the. the 12 members of the governing council want sufficient time to judge of the euro area economy is overcoming. no formal discussions have been held on rate strategy and drop to its lowest level in two weeks. chinese telcos have told the hong kong stock exchange they are taking steps to resolve the u.s. tech ban that the company says threatens and survival. it is being blocked from buying american components as punishment for exporting equipment to iran and north korea. the company says the ban could hurt its global business, and it is working with relevant authorities to find a solution. global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries.

i'm paul allen. this is bloomberg. ♪ >> thank you. stocks are down, dollar catching a bid, it comes back to the products out of steven mnuchin, saying he's considering a trip to china due to a trade spats that has been ongoing between the world's largest economy. the imf is warning that an escalation of attention could derail the synchronized global growth story. we are joined by our senior international editor. does this actually signal a breakthrough? well,l it signals that -- it signals that they want to talk about it, although the treasury secretary did not give specifics about when he would go to china. the fact that he wants to talk about it and try to de-escalate

is significant, and he did speak with the head of china's central bank at the imf meeting. they talked about central bank he said they also talked about china's opening, willingness to open its economy more which they appreciated. week things escalate a little more with the u.s. saying that in addition to tariffs it is looking at imposing restrictions on their to punish in the u.s. china for what the u.s. views as violations of its intellectual property rights. the have seen this go back and forth. >> have we heard from the chinese on this latest? >> not really. we will be waiting to see what they have to say. one would suspect they would be open because they wanted these

as well. >> back at the imf, they came in case this gets written. it does put at risk this global growth story. why are they so concerned? >> i think part of this is the escalation. six months ago at their semiannual meeting, this was not on the meeting. later, almost every week we see it. what they are concerned about is how much this is escalating. there are also risks to the global growth expansion if the issue of debt, this growing higher love debt. brown,ch president mack he is somewhat involved in this. how does he fit in? this's going to washington week to meet with president trump and address a joint

session of congress. he is going partly because he has a rapport, or is that to have a report, with president trump that other world leaders , thereand he is hoping is hope that he may be able to make some progress in terms of trade and trying to defuse america first foreign trade policies. we will see how successful he is in that, with other leaders trump has had a rapport, that doesn't always work. went minister shinzo abe last week and left relatively empty-handed. they will also try to discuss the iran nuclear agreement, which president trump has on he mightccasions said have the u.s. leave because he doesn't think it is in their interest anymore. i keep deadline will be coming up on that. so this will also be key. hasce a lot of countries

said they will stay in the agreement if they think iran is meeting its requirements under the agreement that was signed. >> lots to discuss. thank you so much. jodi schneider, senior international editor on top of all things washington for us as we get started. let me tell you with happening. we have to talk about this hedge fund that seems to be betting on anything. president trump tweeting his ire over opec. higher oilext, prices could bring inflation risks to economies across the region. we discuss which ones could be most effective and which ones you want to avoid. that's next. this is bloomberg. ♪

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business flash headlines. shares of toshiba jumping the most since november. this after reports it is considering dropping the sale of its memory chip unit. they say plans could be canceled if toshiba doesn't receive approval from chinese antitrust authorities by the end of may. toshiba says there are no plans to abandon the deal, and that these transaction goals are seen as a possible. let's have a look at mobile. goldilocks investment says it is threatened by a move to walk the nomination of board members. if that's that is required by .aw to reject an obligation goldilocks opposes mobile and about half the $3.4 billion debt ridden off in

exchange. deals, chinese platform -- launching an ipo in hong kong, raising more than $1 billion usd. the insurance subsidiary is taking orders. citigroup and jpmorgan are joint sponsors. ♪ >> a week and a half away from that. let's get back to the hearing and have a look at markets. u.s. treasuries are in the spotlight as inflation expectations continue their slow grind higher. joining us now, td securities senior market strategist joins a set of singapore. great to see you, thanks for coming on the shore. i wonder whether we can say this recent dialing down in geopolitics is perhaps behind the recent move up at the long

end of the yield curve. true.part, that's certainly we were in an environment for several weeks of the flattening of the yield curve. markets as now moved toward pricing in almost four hikes, or toward four hikes, and we are seeing it being built on the long end. i think that's a trend that 3%,inues, psychologically at the moment the pressure remains and some of the dialing down in tension and risk aversion may be having some impact as well as expectations of continued strong growth in the u.s. fiscalnow, we have the deficit which will be substantially increased because of tax cut so all of this is playing negatively for treasury deal. -- treasury yields. it is hard to say a move sustained above this 3% level in

u.s. 10 year. >> i was about to ask you, just this morning, australia sold 2029 bonds at 2.89%. that, can weike really expect yields to move sustainably higher from here? >> that's right. i think demand still remains pretty strong. we look at investment flows, fromjapan, diversifying japanese assets. we will see strong demand for bonds which will keep the cap on yields but i think you have an environment where you have , acal issues in the u.s. potential pressure point that could keep yields elevated. >> i'd ask you about inflation expectations, especially in asia.

based on the people we have spoken with recently, the philippines and india seem to be topping the list of many analysts, perhaps the hot spots. do you think those are justified, and where else should we be watching? if you look at the central banks in the region, they are certainly shifting towards less accommodative policy. the malaysia hike, korea hike, --na, philippines could be philippines could be the next central-bank to move. that has been in the cards for a while in the trajectory of inflation would suggest philippines as the next central-bank to move. but that said we don't look at india fore in a rush, instance, we don't expect the r.b.i. to hike rates anytime soon.

inflation in the last couple months has been relatively well contained. yes, inflation will move higher this fiscal year, but not enough to worry the r.b.i. to such an extent that they will be in a rush to tighten policy. in of the bigger concerns indonesia is any potential pressure is on the currency. we have seen in the last few days both the indonesia repeal and the rupee, there trouble. that could have implications for central-bank policy. >> well we were speaking we were getting, comments coming out of the philippine central bank governor. he is saying they have been under fire since last week, a lot of people say it was because they were behind the curve. said, has the philippine central bank almost gotten to the point where they have to

hike just to appear ahead of the curve? concerns, one of the the pressure points, this has been the biggest underperformer and at the moment the central bank hasn't seemed that concerned about its weakness but clearly if this continues that will have implications on imports and it could mean higher projection and that is why central bankers may have to hike rates sooner than anticipated. is a risk of falling behind the to avoid falling behind the curve, but domestic fundamentals of relatively -- higher trajectory for inflation, suggesting that it should be relatively soon. >> when to me talk about oil in india? >> oil prices clearly are very,

very important for india. that has implications across the board. again, higher oil prices at this level i don't think have been anticipated. yes, oil inflation has been well contained in india so it's not that the r.b.i. is particularly concerned but if you see inflation pressures coming through into domestic energy prices, that will clearly implicate it -- we think the r.b.i. will hike later in the year, not anytime soon. we will watch inflation and oil particularly closely. we think oil prices will start to moderate going into the end of the year and the next few months and that will be left with the pest moves in oil

prices that could feed into inflation. collects well we're talking about india, the or recently added to the currency watchlist of the u.s. treasury. there,re a policymaker do i ignore that, or does that affect my practices over the next 12 months? >> it is hard to ignore. i'd argue most central banks in the region have been keeping when i on this report, especially given the comments we see from the u.s. administration and the focus on fx. i don't think india will ignore this, i think it will have implications on their policy. the threshold is around 2% of gdp and it has to be relatively one-sided. india breached that threshold in the last report but at the same time they also breached the

bilateral trade in the u.s. which breached the $20 billion mark. the one area where they haven't is the current account. india has a current account deficit, not surplus. haveeality is they still some way before they breached the threshold. -- iheless i do agree think it means the r.b.i. might be less interventionist in terms of their fx policy. they could allow the currency to strengthen more than they would have done. >> we are just getting the latest rates right now. out a notejust put on the hong kong dollar, pressure but no panic is the title. we will get the chart up right now. hibor and libor spread. we are at 100ing, basis points right now. where do you see this going, and how narrow does this need to get?

>> well, as we put it in the paper, the pressure will continue in the next few weeks. it is hard to see a substantial narrowing of the point. hong kong is still flush with liquidities. you need to see substantial interventions to reduce that money market or aggregate point it is at this moving in the right direction but is still relatively slow. i think it could still take some before that overall liquidity is reduced sufficiently to push hibor rates higher and narrow the gap with the libor rates. we could be talking about several weeks if not months. it probably means more intervention and i don't think it will be in the risk to the hong kong dollar and it will not quick process to get it back to it narrow spread. markickly, on the boe,

carney's comments seem to be getting a lot of listeners -- probability below 50%. what do you think? >> you still think we will have a may rate hike. bonds have declined on the back of his comments, which sounded relatively soft. of course we think it could also be august, that has narrowed to 60%. nonetheless, the chances are still more likely. butwould be a one-off deal, if you look at inflation trend, the growth is still around, close to trend in the u.k. it would be a good time to hike rates. but of course we will wait to see the q1 gdp report coming out next week, that will be important. if we see anything substantially lower than the .3% consensus, that could take away any expectation of array to move in that. >> thank you.

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♪ >> let's have a look at deutsche bank. two months after one of its weakest shareholders moved, they say they will be cutting their stake in the bank. our asian conglomerates editor -- was this the price? this just popped into your email, a notice for this on sunday, you would be surprised. they had just said they wouldn't be selling the stake down and yet here they are. if you read the story you see it was related to a derivative

transaction, a complex collar structure they set up. they have used it in a lot of cases to finance their ongoing expansion. this would have been predictable, and it's not that big. the size of the stake is less than 1%. >> how is hna doing? >> they have set a target to raise $16 billion to help them pay down debt. they are not quite there yet. they still need to make more transactions. if you look at what they have announced, that is closer to $20 billion. they have a lot of plans sales but the actual transactions, that doesn't hit the $16 billion market. seetill have to wait and and expect a couple big transactions. >> dave, thank you.

dave mccombs. stay with us. this is bloomberg. ♪ this wi-fi is fast.

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>> 11:29 a.m. in hong kong and singapore, 1:29 p.m. in sydney. paul allen with first word headlines. china says it welcomes a potential visit by treasury secretary steven mnuchin, who says he is cautiously optimistic the two sides can reach agreement on trade. mnuchin is planning to travel to beijing, though no dates have been determined. the u.s. and china have both warned a full-blown trade dispute could derail the global economy. rating hass poll fallen to a new low as a series of scandals weighs on his government. a survey puts his approval at 29%, down 3.6%, the lowest since

he came to power in 2012. 38% of respondents said he should step aside when his term as party leader ends in september. almost a quarter think he should quit immediately. bloomberg has been told theresa ay is fighting to avert rebellion inside her conservative party, with eurosceptics concerned she may go back on her promise to take the u.k. out of the eu trading bloc. toy think she may be forced stay in the customs union because parliament will reject her plan to abandon it. sayssecurity firm fireeye chinese companies have attacked japanese defense companies, possibly seeking information on japan's approach to resolving the nuclear issue in north korea. fireeye says the hacking group typically targets research and development organizations to

collect information on geopolitics. global news 24 hours a day, on the air and at tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. 0.1% acrosswn about the regional benchmark. let's get over to sophie. >> asian stocks are under pressure, despite u.s. futures pointing higher. the uptick in treasury yields is sparking anxiety. the bond bears are out. malaysian paper falling for a sixth straight session with concerns over rising inflation, and the earnings outlook. stock and currencies taking a hit. tech the worst performing sector. laggards.i amid the we will get a sense of how tech heavyweights are faring with samsung, alphabet reporting. hundreds of topix listed com

panies are on the schedule including canon. still set for a second day of losses. plenty to keep japanese investors riveted, with industrial and job data out ahead of the boj meeting on friday, with no change expected from kuroda and company. the yen is heading near 108 with the dollar near a one-month high, as treasury yields eye 3% for the first time since 2014. the mizuno securities chief of dollar-young i -- dollar-yen is testing. as we count down to the two koreas meeting, the korean won has been range bound, but the expectation is for a run to 1050 on positive expectations for the meeting on friday. korean debt risk continues to

fall against this backdrop. if we see a run to the 39 level, that perhaps could help the won break into a stronger range. check out this chart on the gtb library, of course. >> well-bid recently, a bit range bound today. is it time now to imagine unification between the two koreas? that's the top line on your bloomberg. it appears the leaders of north and south korea may get a jump on their historic summit later this week by possibly speaking each other over a reconnected hotline. stephen engle is here with the latest. >> unification is a long ways away. moonis the goal of the administration, the goal of kim jong-un, but who would rule that reunified --

there's some steps taken ahead of the historic friday meeting between moon jae-in and kim jong-un. we are hearing from the leader of the ruling party, saying that according to yonhap news agency, the hotline has been reactivated, and could be used by the two leaders at some point today to say their hellos. a few other good gestures overnight. at midnight, the south turned off the volume on those loudspeakers they last across the dmz, broadcasting news, criticism of the kim regime and kpop, 24/7, but they have turned it off as of the night. we are the north koreans turned down the volume of their propaganda blasts after the winter olympics. we don't know if they will turn them off completely. generally, the mood is shaping to be a positive one ahead of this meeting on friday. >> we already see stocks related to inter-korean business start to move.

have we heard from the other parties? this is not just about the two koreas. >> we heard on friday from the north korean news agency. it pretty much confirms the status quo since friday. they will halt nuclear and icbm tests, and dismantle the testing site in the northeast, so that is good news, but it does not state denuclearization. we don't know the fate of the 60 or so estimated warheads they have, or how many missiles they have, whether those will be dismantled. donald trump has welcomed it on friday, good news, big progress, but he came out yesterday with the latest tweet saying, a long way from conclusion, maybe things will work out, maybe they won't, only time will tell. chinense,om the calling on japan -- chinese, calling on japan and the u.s. to halt unilateral

sanctions. japan is kind of on the sidelines with the summit happening. they will not have a seat at the table. tweetst things first, a that the two koreas will meet, and that is what we are keeping an eye on. let's look at oil. president trump tweeted about korea, and also talking about oil, hitting opec, accusing them of pushing up prices to high levels that he says are not acceptable. but russia's energy minister denies all that, saying the market will decide pricing. alexander novak also said the production curve has helped revive the industry in texas. >> i would like to answer. we do not say price is upward or downward. the market sets the price based on fundamental factors, like supply and demand. >> lots of facets to the oil

story. to's bring in been sharp, talk about oil. if i fell asleep thursday and woke up today, what do i need to know about opec? >> the opec meeting, no changes to policy, moving on with cuts. there was a lot of bullish talk, rebalancing happening, cuts continuing. theyaudis, there is talk are looking for $80 a barrel for oil. we are around $74 at the moment. no one thought we would be near this level, but rebalancing is at work. all a little overshadowed by the trump tweet, the artificially high prices it was talking about. >> what do you think was behind that? >> good question. [laughter] who knows when it comes to trump. there was a reaction, and this time it comes to oil. he's marginally right, i guess, when it comes to opec cutting

the surplus out of the market, tightening the market. there is a fundamental reason. but remember, some of the beneficiaries of this high oil price is going to be u.s. companies, and we see them cashing in. higher production, rig count is climbing, and they are probably making decent money. >> we have a chart on that. mr. novak said, it helps your industry in texas. can i get that chart? the prices on top, brent and west texas. at the bottom, the latest rig counts. 820. >> since the start of the year, we have seen two weeks where they have fallen. output,ts and prices, sending prices higher. expect that to continue. at the moment there is no pressure on the price, but at some point there has to be. as soon as the market tightens, you will see the prices, higher and higher. >> anything in the next few days

on the macro agenda we need to be aware of? >> not so much the macro agenda. a flood of earnings, so we get a sense of how companies are cashing in, how it is refracted in balance sheets. you should see pretty good numbers out of the oil companies. to take you back to the trump tweet. a couple things there. talking about sanctions on iran. if sanctions are brought back on iran, that will tighten the market even further. that's a u.s.-driven thing. prices for go higher, even further. trump,eet from donald pushing back on opec, saying they have kept prices artificially high, getting it up for our viewers there. " looks like opec is that it again with records amount of oi l" -- we are back to the five-year average, including fully loaded ships at sea. some point, they

starts to hit the u.s. consumer. >> prices are almost three dollars a gallon, driving se ason, that is probably the thinking. higher gasoline prices, that hits the consumers. there are more consumers than there are people working in the oil and gas industry. that is your face getting hit. that could be some thinking behind the tweet. >> implications on the oil story, including india. thank you so much, ben sharples. speaking of india, the open is coming up. we look at scandals, bad debt at the big banks, are putting at risk the overall economy. we put everything together for you in a few minutes from now. don't tour way. this is bloomberg. ♪

>> we are just over two minutes away from the open of the cash markets in india. good morning to you, if you're just joining us. as we march towards the open, looking at futures. a little pressure there. broadly speaking, that is the picture across the region right now. lots of things to consider in india. oil, obviously. looking at the 10-year yield at the moment. a broader picture really, when you look at scandals, bad debts, cash shortages. the banking system experiencing them all, in recent months. this bad run is starting to have repercussions for the broader economy, and maybe the prospects of narendra modi. for more, we are joined by our economy and policy editor in india. the headlines are bad.

how much do you think these scandals will go on to affect growth, is my question. >> it looks like they never went away, he banking system problems. now plagued by this $2 billion diamond scandal that has affected the second largest state-owned bank, the poor job national -- punjab national bank. the head ofe had another bank registered by the investigation agencies for cheating. that bank showed losses for nine straight quarters. that's not all. the private sector bank has had problems with nonperforming loans. all these things are impacting business and corporate sentiment, not to speak about the banking sector sentiment. we have bloomberg, our bloomberg economist cut the growth forecast, pointing out these problems as a downside risk.

goldman sachs, a few weeks back, cut growth to 7.6%, from 8%. even that is a little higher than consensus, and even the r.b.i. estimate of 7.4%. keep in mind, that 7.4% is not enough to actually generate more jobs, which prime minister modi wants, desperately needs before the elections next year. scandal.o the banking a lot of these things have been around for years and years now. why are they suddenly all coming to light recently? little, there is a increased regulatory scrutiny, as well as investigative scrutiny. both have come at this time together. state runl shows us banks suffer from proper due diligence, as well as technological problems, and the

companies themselves have not been able to repay loans, especially companies in the green occasions, -- communications, power sectors. they are saddled with huge debt, and unable to pay because demand has been low, generating excess capacity. this is a balance sheet problem for companies as well as banks. asked for more and more, and there are more and more skeletons tumbling out on almost a daily basis as far as the cheating scandal goes. the investigation agencies are also behind these bankers, for wrongdoing in the past few years. >> thank you. anirban nag, live for us at of india. the markets are now up and running, for about one minute, 41 seconds. let's get it over to sophie,

with what we have seen in that minute and 50. >> fluctuations at the open in mumbai. after faltering on friday. we do have i.t., telco stocks dragging on the index. infosys among the biggest drags today. a the financials, rising third day after a reported fourth-quarter net income just shy of estimates. analysts reckon the bank is well-placed to weather the challenges of capital adequacy and bad loans. we will keep an eye on bharti infratel and lic housing finance. reliance industries, gaining ground as they say they are not aware of any further investigations. are0% of india's oil needs

imported from abroad. jpmorgan had a note, and i am guessing it was not a favorable one when it comes to equities. >> oil is on the boil, crude prices simmering year 2015 highs, after rallying nearly 65% from a 12 month low, noted by the yellow line on this chart. indian stocks have been fairly resilient to the rise thus far. the msci index, in white on this chart, little changed this year after rising 20% in 2017. they hit record high after record high as crude prices have languished since 2014. but with oil prices on an upward trajectory, that would accentuate india's deficit problems, as well as rising inflation, what jpmorgan is cautioning over. hase 20104, the msci index underperformed when oil prices have soared. >> higher oil and india don't

mix well. thank you so much. if you are one of our clients,a bloomberg subscriber, you can catch up on all the interviews you may have missed. o tv n, the function on your bloomberg. join the conversation, send us instant messages, to our team or guests. our earlier conversations. check it out, tv . we speak to the man behind the wheel -- they are looking to orminate the market f driverless cars by 2030. this is bloomberg. ♪

>> chinese startup horizon robotics is looking to dominate the market for driverless cars by 2030. the company is about to close a

new round of financing that will raise several hundred million u.s. dollars for them. in an exclusive interview, its founder and ceo told us the money will be spent on ramping up research capabilities. raise severalo hundred million u.s. dollars strategice some new investors. our year, we had intel as strategic investor, and this year we can have another major conductor global player, not intel, to be part of our team. major investors. it's very exciting. >> how do you compete with the

mobileeye.idia or >> we targeted a totally new autonothe challenges for mous driving cars. we need to develop the veryology, facilitating efficient computation, low power consumption, all the way to decision-making, planning. so this is a totally open, new space. in this, everyone has an opportunity. we have global level confidence for technology, and a really challenging traffic situation, and we have a massive market. putting all three factors together, we have full confidence to deliver cutting-edge technology. >> facebook and alibaba are making moves into the chip

sector.how much of an impact is that likely to have? >> that is extremely positive. that means, i think, people really push forward. they need to think about, to a.i.ine and innovate the processors. that is great. alibaba and facebook, their primary focus is for the consumer business, like selling smart speakers to the customers. >> so at this stage, not a direct threat to you? >> no. i think we are doing something like a moonshot, rihght? they are not doing things at that level, so we are not competing. >> whether or not the u.s. decision to erect barriers to yourech assets makes business proposition more compelling? >> i would say, probably in reality yes, because the trump

administration's decision probably will urge the china government to spend more money n the type of core technology of our business. >> do you see yourselves as a key part of china's made in china 2025 strategy? k whath think -- i thin is essential for us is to be the leader by 2025, with 30 million cars in china equipped with our processors. we can be the number one player in that space. i thinkout, by 2025, most of the cars, 70% of the cars will be equipped with these a.i. processors, and horizon robotics is going to be the only player in china, right? i don't see any reason we cannot

achieve the goal, to be the market leader. kai, horizonu robotics founder and ceo in beijing. bloomberg markets middle east coming up at the top of the hour, and manus cranny is standing by for us in dubai. good morning. >> very good day to you. we have a stacked up show. ceo conversations aplenty. where are they placing bets on a global basis? zac hidari. about at 8:30, just under 30 minutes time. the big investment themes, more of the same to come. and a ceo from saudi arabia, talking about the impact of mohammad bin salman on the world economy.

what is happening to the expat levy. monteg one, sergio delivers his numbers in just under 58 minutes at ubs. matt miller is picking up the reins. a euphoric start to the year. does that translate to bottom-line numbers? on bloomberg, 5:45. >> lot to look forward to. coming up at the top of this hour. a quick look across markets right now. i will not lie to you, not very exciting out there in markets. lower for the most part of the region. with the exception of south korea, seeing a spike in volumes. the rest of asia waiting for ket t -- keys to come out. we might get a little more data in the afternoon. singapore inflation also coming out. u.s. futures started higher, then meandered lower. u.s. 10-year, 2.98%. the five and 30 curves were a

little flatter. take a step back, 30,000 feet, the spread back to 2007. that is it for us from "th" bloomberg markets asia." ♪

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